From the President: Regional Workforce has the Skills, Needs the Jobs

April 19, 2017

With the rejuvenation of the Alliance over the past 12 months, collaboration across regional organizations has reached a new high. These collaborative efforts were on display at the 2017 State of the Workforce Report presented by Mr. John Hawkins, Director of Workforce Development for Economic Modeling Specialists International (EMSI). This report was made possible by the cooperative effort between the regional workforce development boards of Opportunity, Inc., the Peninsula Council for Workforce Development, the Hampton Roads Economic Development Alliance, and Reinvent Hampton Roads. This was the first time the Peninsula and the Southside have collaborated on a regional state of the workforce report. This report examined where we’ve been, where we are today, and what opportunities and challenges lay ahead. Moving forward, this report provides a foundation for discussion and planning as it highlights evidence based conclusions on how we can work cohesively, to create a brighter future for Hampton Roads.

So where have we been?

Regionally, the framework for economic well-being and inclusivity is one that has struggled to stabilize and continues to sputter. To those of us with local knowledge, it should come as no surprise that the region has not created net new jobs since its peak in July of 2007. We were reminded of this trend once again last week during the briefing of the report, which highlighted the region’s lackluster job growth and economic stagnation. As reported, employment growth in Hampton Roads grew on average .7% year-over-year 2010-2015, while the regional labor force grew at a shamefully low .1% over the same period. Both variables lag behind the Commonwealth of Virginia as well as the Nation.

The well-studied and poorly executed phenomenon of the extended period of subpar employment growth within Hampton Roads has rippled itself through the regional economy for a decade. The continuous downward pressure from decreased Department of Defense spending and military downsizing has tightened the proverbial belt and has provoked a “new normal” mindset for both our public and private sector leadership. This “new normal” is unsatisfactory.

The reality is, the economic driver that once insulated our economy hasn’t stabilized as a primary source for economic investment and job creation as it once had. Our conformity to federal spending has hence crippled our economy and has set us back far behind our peer regions. To provide context, from its employment peak in July 2007 to its trough in February 2010, the region of Hampton Roads lost an estimated 48,000 civilian jobs or 6.12% of its civilian nonfarm employment. While this statistic seems startling, other metropolitan areas around the nation experienced larger losses by an order of magnitude to their own levels of employment. Our neighbors in Richmond lost 6.2%, Charleston, South Carolina lost 7%, Charlotte, North Carolina lost 9%, both Jacksonville and Orlando, Florida lost nearly 10%. Of these peer metro areas, it took an average of 5 years to regain jobs lost. Locally, we have yet to recover.

So where are we now?

Currently, according to the most recent March 2017 seasonally adjusted data, the region is shy of its pre-recession peak level of employment by 8,000 jobs (only 1,800 jobs closer than when we first reported this gap in April 2016). However, to finish out the year, Hampton Roads witnessed an uptick in employment December 1, 2016-January 1, 2017. Over that time period the region added 4,900 jobs putting us optimistically in reach, by only 5,000 jobs. However, seasonally adjusted employment creation has since fallen January 2017-March 2017, where net-new jobs created December-YTD only amounts to +1,900. That said, if the region were to grow at its average 2016 rate, employment should return to its peak in late 2017 or early 2018. While this might feel like a victory, it’s not. There is a lot of work that needs to be done. To depict the 2016 trends described, the chart below highlights the month-over-month movements in 2016 civilian nonfarm employment with current year-to-date figures.

The main purpose of the 2017 State of the Workforce report was to identify occupational skills gaps that currently exist within the region of Hampton Roads. Simply defined, skills gaps are the perceived mismatch between the needs of employers for skilled talent and the skills possessed by the available workforce. To perform such an analysis, EMSI compared 2015 graduates in regional programs to the average annual job opening by occupation 2010-2015.This methodology helps paint the supply and demand picture of Hampton Roads. It is important to note that some workers in these fields, especially those in trade occupations rely more heavily upon on-the-job training and don’t receive formal educational training. As such, the number of graduates in programs tied to these occupations serves as an approximation of estimated supply, while annual job openings serve as projected labor market demand.

Methodology aside, experiencing higher amounts of occupational demand and lower amounts of occupational supply creates the materialization of an occupational gap. What is most interesting within the report is perhaps not a phenomenon of a skills gap, but that of a jobs gap.

As an example, we highlight the Information, Analytics, and Security cluster. This cluster has been identified by Reinvent Hampton Roads as one that, through focused effort, can accelerate and stimulate regional economic growth. As any cluster would, the aggregation of similar industries employs a variety of different occupations. Some of the occupations within Information, Analytics, and Security include: Information Security Analysts, Computer Systems Analysts, Network and Computer Systems Administrators, Computer Programmers, Computer Network Architects, etc.

Of the occupations described above, let’s highlight Information Security Analysts. The jobs gap is such that program completions (supply) that map well to Information Security Analysts graduated 822 students’ region-wide in 2015. At the same time, the five-year average annual job opening (demand), across all industries for this occupation amounted to only 34. Very simply stated, this presents an over-supply of regional workers. An oversupply of workers that, through focused growth and coordination, has the opportunity to strengthen the technological base of the Hampton Roads workforce. By capturing its current regional surplus of graduates, Hampton Roads can further it's regional concentrations and become more specialized not only within computer and information technologies but many other value-add occupational mixes.

What opportunities and challenges lay ahead?

An inclusive factor within the long-term strategy to strengthen the economic base of Hampton Roads is to elevate our regional strengths and minimize our collective weaknesses. The Alliance understands that a well-prepared workforce provides the fuel to drive economic prosperity. However, if the regional economy is unable to supply reasonable employment opportunities, this high-quality workforce will find employment elsewhere.

This is ultimately both the challenge and the opportunity. Currently, and indeed historically, regional firms have not expanded at rate congruent with the outflow of regional graduates. The ties to federal contracts have outweighed the desire to diversify and have ultimately led to where we are today. This is reflected in our bleak civilian employment growth, our nonexistent labor force growth, and the year-over-year drain of negative outmigration.

The opportunity then is to uncover ways to tap into the overabundance of qualified and educated talent who are graduating within the region of Hampton Roads. Creating an environment from which local businesses and regional employers are able to expand their operations and encourage new and accelerated growth. From here and into the future, organizations that have attached themselves to regional economic development and job creation have the responsibility to publicize tangible goals and metrics from which regional high-growth and organizational efficiencies can be measured. In 2016, the Alliance put forth a bold high-growth strategy to do just that, and play our part to get this region back on track.

To read the 2017 State of the Workforce report in its entirity, please click here.